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  • NAESCO Advocacy Report
    NAESCO's advocacy work continues to expand to ensure that the growing number of energy efficiency initiatives across the country are cost-effective, sustainable, and offer new opportunities for ESCOs and other NAESCO members.

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Featured Articles

Interview with Lynn Tabernacki, Director of Renewable Energy and Environmental Finance of the Overseas Private Investment Corporation
 

Lynn Tabernacki is the Director of Renewable Energy and Environmental Finance at the Overseas Private Investment Corporation ("OPIC") and is currently overseeing their energy efficiency initiative in developing countries.

What is OPIC's ESCO goal?
In keeping with the Obama Administration's National Export Initiative, the Overseas Private Investment Corporation (OPIC) is actively pursuing opportunities to finance energy efficiency investments and, more specifically, ESCO activities. OPIC's goal is to further catalyze the energy efficiency sector within developing countries in order to support the growth of U.S. ESCOs and U.S. equipment and technology providers operating within those markets.

What is OPIC?
OPIC is an independent agency of the U.S. government, established in 1971 with a mission to support U.S. investors undertaking private sector projects in the emerging markets. OPIC's goals are to foster economic development, grow U.S. businesses through foreign direct investment, and promote U.S. foreign policy. OPIC offers long-term, fixed-rate debt financing and political risk insurance to eligible investors. OPIC charges commercially-based interest rates and premiums in markets where such long-term financing and insurance is usually unavailable. As a result, OPIC operates on a self-sustaining basis without cost to U.S. taxpayers, and in fact returns funds to the U.S. Treasury each year.

How does energy efficiency investment fit within OPIC's strategic mission?
Currently, support for renewable energy and energy efficiency projects is a top priority of OPIC. We have been working in these markets for decades and have a strong pipeline of transactions. OPIC also has a greenhouse gas (GHG) emissions cap which is intended to ensure an overall reduction in OPIC's portfolio GHGs over the next ten years.

That said, we know that the best and most immediate means of reducing GHGs and energy dependence can be achieved from the demand side. Therefore, it is important for us to focus on energy efficiency projects and to find ways to support this fast-growing sector. Directing finance products to this sector can have a pervasive impact.

What products or programs is OPIC gearing toward energy efficiency?
We are in the midst of defining those areas where OPIC financing can be most meaningful. We have two areas of focus. First, we would like to provide direct support to American ESCOs undertaking projects in emerging markets. Through our traditional structures we are able to provide either direct loans or investment guaranties to fund the ESCOs in their downstream investment plans.

Secondly, we intend to offer subordinated debt directly to projects for the purpose of energy efficiency improvements. This will be both for greenfield projects and retrofits. OPIC will finance both (a) 100 percent of the cost of outside engineering or architectural consultants to define the most cost-effective improvements, and (b) the full cost of the energy efficiency investments themselves. Similar to the ESCO model, repayments will come from the cost savings achieved over time.

It is important to note though that in this latter product, we are not seeking to compete with ESCOs, but rather to collaborate with them. If there is an opportunity to invest alongside the ESCO or to fund an ESCO's investment directly in this way, we will work toward that solution.

We believe that as the provider of a stand-alone product, OPIC can be relevant for those projects that may be too small to attract other players, too large for just one player, or located in risky countries with few established ESCOs. To the extent that we can draw in American ESCOs to the evaluation or investment process, our efforts could prove instrumental for the sector's development in emerging markets.

What is the next step if an ESCO is interested in learning more about funding for itself or for its projects in developing countries?
First, bear in mind that as a U.S. government agency, OPIC are mandated to support U.S. investors. We can meet that standard either through the involvement of an American ESCO involvement or with a U.S. sponsor holding at least a 25 percent interest in the foreign project.

Assuming that hurdle is met, I suggest simply getting in touch with OPIC to discuss a prospective project or transaction idea. It is always more productive if we can receive a few discussion points on the project before a call. The important point is that we are very serious about developing our programs in the energy efficiency sector. We'd like to engage early with ESCO experts to promote projects of mutual interest and to craft workable structures that can be replicated in other challenging markets.

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NAESCO and CTS Coordinate First Member Media Event Promoting Performance Contracting

On August 26, NAESCO hosted a media event showcasing a member project at Rantoul Public Schools in Rantoul, IL. The event highlighted the major energy efficiency initiatives implemented throughout the school district. Control Technology and Solutions (CTS) was the ESCO behind the project. In addition to several media outlets, CTS representatives and staff of the Rantoul School District, State Senator Michael Frerichs, Superintendent Bill Trankina, Scott Ririe of CTS, and Meghan Morrison of NAESCO were in attendance. The event was picked up by AP, featured on the front page of the local paper as well as was covered by regional papers in the area.

The project will save Rantoul Public Schools $26 million in energy and operational costs and resulted in hiring approximately 145 local workers to implement the efficient measures. Additionally, the retrofits will drastically reduce the carbon emissions generated by the school facilities. According to State Senator Michael Frerichs, "Green energy is the fastest growing sector in the American economy. This project has shown our community's commitment to reducing its carbon footprint and its willingness to improve the natural environment of Illinois."

CTS installed a geothermal heating and cooling system, as well as retrofitted T-12 lighting and single pane windows. The work on the five-campus project was able to be started and completed during summer break in time for the students to return to class immediately after Labor Day. On behalf of the District, CTS applied for and received a $90,000 ICECF grant for the energy savings improvements. CTS also submitted and received a $480,000 ARRA grant. The board authorized issuance of $9 million Build American bonds and $6.5 in Qualified Zone Academy Bonds to finance the project. The bonds will be repaid with revenue generated by the onepercent school construction county sales tax and the annual savings which the project will achieve.

Speakers representing local municipalities, the State of Illinois, CTS and NAESCO were enthusiastic about the level of energy efficiency investment underway and the efforts the district is making to cut their energy consumption without using funds from the district budget or taxpayers. Senator Frerichs: "It isn't very often that an economic development project can create jobs and reduce local tax burdens at the same time. The creativity of this project allows it to generate jobs and economic stability while producing long-term financial savings for the local school district. It is a textbook example of how investing in energy-efficient technology is good for our economy and our pocketbook."

This event is the first of many that NAESCO is planning to spotlight member projects and focus the attention of media representatives and policy makers on the successful energy and operational savings generated by performance contracting projects.

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State Energy Officials Report to Congressional Group on Impact of ARRA Funding on the Creation of Jobs and Energy Efficiency Innovation(Re-printed with permission from NASEO website)

Four State Energy Office directors recently briefed a Congressional audience on the economic impacts of Recovery Act funding on the U.S. State Energy Program. Hosted by the Environmental and Energy Study Institute, the panel addressed more than 110 people crowded into a briefing room in Washington, D.C.

The panel included Phil Giudice, Commissioner, Massachusetts Department of Energy Resources and NASEO Chair; Louise Moore, Chief of the Energy and Pollution Prevention Bureau, Montana Department of Environmental Quality; Frank Murray, President and CEO, New York State Energy Research and Development Authority; and Theodore Peck, Energy Administrator, Strategic Industries Division, Hawaii Department of Business, Economic Development and Tourism. The panelists, as board members of the National Association of State Energy Officials, represent the 56 state and territory energy offices that administer the U.S. State Energy Program (SEP) funds on the state level.

SEP received $3.1 billion in stimulus funds that were allocated to states and territories on a formula basis. The states leveraged these funds with state-based funds from their program partners and the private sector funding for a total impact of $4.7 billion.

"Each state was entrusted with figuring out the best way to put that (stimulus) money to work in their specific situation, their circumstances and to make a lasting difference," said Commissioner Giudice, who is also Chair of NASEO. "And it is working well across the country."

Giudice pointed to the current status of the program to illustrate his point. "The states have responded by obligating either through contractors and vendors for $2.5 billion of those funds. Almost 60, 70 percent of that money is now making jobs happen and every one of the states and territories are putting this money to work."

Giudice noted that there have been many challenges and that the states and the Department of Energy are working together very productively and collaboratively to solve them and make a difference on these matters.

Challenges have included legislative barriers as well as processes that the federal government and the states needed to work through to put that money to work. "And this is not just about the federal stimulus money," Giudice added. "We are leveraging $1.50 from the private sector and other sources (for every $1 of stimulus) to match the $3.1 billion. More than $4.7 billion is being put to work in these various programs from federal and private sector."

In his presentation Giudice and the other panelists said the applications that states submitted to the Department of Energy in May 2009, as defined by the ARRA legislation, were to be three-year plans.

"One of the challenges, and it is not the fault of anybody, is that things have changed," Giudice said in wrapping up his comments. "The initial funding was provided under the context of this is going to be a three-year program and now there is so much effort and concern to spend all of the money now, 12 months after the president has signed [the legislation], and if you don't something is wrong."

"And it is not necessarily that something is wrong," he concluded, "but folks are feeling a different set of pressures now than they might have felt before."

Each member of the panel spoke to those pressures and the enormous amount of interest in the actual spend rate. Describing the "dollars spent" metric as a lagging indicator of what is actually happening at the local level in terms of creating jobs and getting work done, NYSERDA President and CEO Frank Murray said the check-writing will happen after the work is complete.

NYSERDA is no stranger to managing large amounts of funding. The organization has an annual budget of $650 million not counting the stimulus. Murray noted that in the 30 or 40 years that NYSERDA has been around there has never been a hint of scandal with the way the state agency has dealt with its funds. "That is because we have the controls in place that make sure you do not get paid until you actually do the work," he said. "And that is what all the states across the country are doing with the ARRA funds. So fixating on what is spent is the wrong metric."

"I think what we need to focus upon is not the spending number -- we should be focusing on the front-end of that process in what we call obligation. Once you obligate the money, once you sign the contract that is when the jobs start being created."

Murray urged the audience to focus on the obligated numbers and use the same common-sense approach they do as homeowners. "Think in terms of your own personal experience," he said. "For those of you that own a home -- you bring in a painter to do some interior decorating, you hire a landscaper, or you replace the roof on your home. And I ask you -- when you hire that person do you go out there and give them all of the money upfront? I don't. I often make a deposit but I make sure they do the work -- the money in that case under federal parlance is obligated. So when you hear that it is not spent -- of course it is not spent. We are not going to spend the money until the people have actually done the work that you have hired them for."

Murray said it is the same thing with the states.

"These are public funds and we have a special responsibility to make sure that these funds are spent efficiently and effectively," he said. "We have to make sure that we avoid fraud and abuse and the only way you do that in my experience is that you don't pay people until the work is done."

"So fixating on what is spent is the wrong metric," he added. "So if you hear these numbers that the states are not spending these monies -- it is baloney. The states are [spending] and when we have obligated these funds we have started putting people to work from the engineering phase all the way to the worker installing the insulation in your house or the solar panel on your roof. That is what economic stimulus is all about -- putting people back to work and we at the states I think are doing a pretty darn good job about it."

QUESTIONS AND ANSWERS

The following is an abbreviated transcript of Question and Answer phase of the briefing.

Q. What mechanism is in place to adapt projects when new standards come out in regards to new energy efficiency standards?

Louise Moore: I will give you a specific example in Montana. We have state legislation that says that any state building needs to be ASHRAE 20.1 and that will move as any new standard comes into being. We are used to changes and can adapt as codes and standards change.

Q. What kind of checks are in place to insure that energy efficiencies that are intended will be realized. How can the federal government insure that it is getting its bang for its buck?

Phil Giudice: The State Energy Program was first funded in 1978, so federal money has been going through these channels for 30-plus years now. And states have been reporting back and making sure that we get good bang for the buck on those funds.

The most recent comprehensive study of the program was conducted by Oak Ridge a few years back and shows a $7 return for every dollar invested in the state energy programs.

This [ARRA] is obviously a lot more money than is traditionally allocated to the state energy programs, but the infrastructure is in place. Massachusetts as well as others have other energy efficiency programs, and measurement and verification are core elements of those programs.

Louise Moore: On the M&V portion we had actually started a process to go out and measure the energy use on every particular project and we are accountable. We will be looking at that and we will be reporting that every two years in reports to the governor and you are very welcome to see those.

Frank Murray: In respect to the grants we make to schools, hospitals and local governments as part of the competitive bidding process there are technical requirements built into the bidding process that become part of the evaluation process, and if you don't meet those you don't get a grant.

In terms of our regular program in both the commercial and residential stock, again this is the lesson that should be learned and it is relevant to ARRA -- we don't give the money out upfront. You get an energy audit done, you identify the potential for savings, and then we set up a payment schedule that is linked to a performance schedule. Then we go back in an audit for quality assurance to ensure that we achieve exactly what you talk about. We have a high degree of confidence in the savings that we are accomplishing.

Theodore Peck: I will tell you my experience in getting the bang for the buck -- the level of transparency associated with ARRA is such that some people are really not even wanting to touch it because of the amount of accountability that is there. So, anyone that is playing with ARRA funds is well aware that there is a very high level of verification. I am not concerned, we will verify of course, but it is definitely getting spent very well.

Q. From your experiences with ARRA, what are the programs that have had the biggest bang for the buck in GHG reductions, jobs and to what extent has NASEO been able to communicate these lessons learned to the Hill?

Phil Giudice: I think we are at the beginning stages of the communication challenge and it is going to be a long-term challenge. I think we are going to need all sorts of help from other organizations and others in how best to get the message across.

What works for Massachusetts is very different than what would work for a neighbor like New York much less Arizona, Montana and Hawaii because they have different climates, building stocks, industrial base and so you really need a solution that is tailored to the circumstances. States, cities and towns are all out there making this happen at the local level and are an incredible resource to figuring out what works and how to think about these programs and how to figure out what happens next after stimulus and to keep moving on the momentum that was built here.

Frank Murray: If you are looking at benefit cost analysis the better investment is energy efficiency instead of renewable. But that certainly is not the case in Hawaii. Ted is talking about solar hot water heaters and potential is quite different in Hawaii than it is in New York state.

I think one of the nice things Congress did do is that did leave it up to the states to pick the programs. So, I don't think there is a simple answer to your question nor do I think from the way Congress put this thing together they are looking for that. I think they are looking to the states and letting them do what they can do in the classic laboratory of democracy type of approach. One size does not fit all.

Theodore Peck: First of all, there are different needs for different states. But, even for the metrics you talked about, one particular program may be very good for greenhouse gas emissions but may not be for jobs. So, really it is a very complex problem set.

Q. Concerning the NEPA process and the NEPA requirements, did each of your projects need to go through each of the hoops that directly federally funded projects need to go through in NEPA or was it a little bit easier?

Phil Giudice: There were certain projects that got categorically excluded but they needed to be confirmed that they fit those categories. So there was a review step for every project that was funded -- some were not particularly burdensome and others were more burdensome. And all of it took time even for those that got categorical exclusions. In Massachusetts I don't think we got that confirmed until something like September or October of last year. So, that is just the nature of the process.

Q. What could have been done better with ARRA funding and the State Energy Programs?

Phil Giudice: I think there is something to be said for setting expectations upfront and being clear on what the priorities are going to be. One of the challenges, and it is not the fault of anybody, is that things have changed a little bit. The initial funding was provided under the context of this is going to be a three-year program and now there is so much effort and concern to spend all of the money now, 12 months after the president has signed [the legislation], and if you don't something is wrong. And it is not necessarily that something is wrong, but folks are feeling a different set of pressures now than they might have felt before. So, I think that more clarity in thinking this through and setting objectives to some of this might have been helpful upfront.

Then there is an enormous amount of issues around reporting and how things are being counted even now -- there are methodologies that OMB have adopted that essentially give you no credit for creating jobs if all you are doing is buying capital equipment because there isn't a timesheet that can be identified with that capital equipment. So you may be using all of your stimulus money to buy new HVAC systems and adding much more efficient HVAC systems, but all of your stimulus money is going just for the equipment and even though jobs are being created to actually install that and to make that equipment if it is Buy American -- so it is all domestic jobs that are being created -- and it will count as zero jobs from an OMB standpoint.

And it is like really? That is the right way to do that? But, nevertheless that is where we are at now.

Frank Murray: This has been a painful process for both DOE and state and local governments. What has happened over the last year or so is we have begun to build the infrastructure that is in place now. To walk away from this infrastructure in a year or two from now will be a really big mistake. We have been down this pathway before and I would hate to see us go down it again.

Theodore Peck: ARRA has created tremendous innovation that no one has been able to figure out how to tie metrics to yet and I think that is a story that is yet to be told.

Q. Is that any effort being made to create a demand for these energy efficient retrofits?

Frank Murray: Efforts are underway to develop more aggressive approaches to residential retrofitting. We are already encountering some sort of curveballs so to speak. Government is never going to have the fiscal resources available to do the scale of investment that needs to be made in terms of residential retrofitting. What we need to do is take the public funds that are available and leverage that into a more substantial investment by the private sector. One of the mechanisms that we were particularly excited about was PACE financing. Despite the efforts of DOE and the White House who were not able to persuade Fannie Mae over the weekend that this is an approach that we should be looking at. But we haven't given up that battle but we are beginning to look at other ways to finance these retrofits -- to capitalize upon private sector resources. That's the only way we are going to be able to make the kind of penetration on the large scale that is going to be necessary to accomplish what we are talking about.

Q. When we talk about the success of the ARRA we talk about the number of jobs that are created. Is there any way to quantify the amount of dollars that are saved by reducing the amount of fossil fuel that is used and getting rid of some of the external costs that come from the use of fossil fuels?

Phil Giudice: There is. I think it was part of every state application to figure the greenhouse gas emissions with every project and we will be reporting that on a regular basis. Right now the focus is all about jobs and so that is what is in the headlines.

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NAESCO Updates

Advocacy

 
During the past three months, NAESCO has been active in a number of new developments in federal, regional and state legislative and regulatory issues that affect the ESCO industry. The highlights of those issues are summarized below. More detail can be found on the NAESCO website.

Strategic Shift in NAESCO Advocacy Initiatives for Remainder of 2010
The efforts to pass comprehensive national energy and climate legislation have stalled in Congress. Meanwhile, energy efficiency programs at the state level, some of which are predicated on the Energy Efficiency Resource Standard passage of which is the key goal for NAESCO federal advocacy efforts, continue to accelerate. NAESCO is therefore shifting its emphasis back to state advocacy efforts to support and grow state energy efficiency programs, while reserving some resources in the event that there is a potential for serious consideration of a national EERS in a lame duck session of Congress.

FEDERAL ADVOCACY HIGHLIGHTS

ARRA

  • • In mid-August, US DOE released revised Guidance documents for financing programs that use SEP or EECBG grants. The Guidance documents define what constitutes obligation of the grant funds, when and under what conditions grantees can draw down funds, and what constitutes expenditure of the funds. The Guidance documents also state that in the case of grants that are used for Revolving Loan Funds, the federal conditions placed on the use of the funds, such as the need for a NEPA review, application of prevailing wages, and meeting the requirements set forth in historic preservation law will continue to apply with each revolution of the funds. The Guidance documents are on the NAESCO website.
  • During the last quarter, the ARRA-funded energy efficiency programs have begun to hit their stride. In its July 30th report, US DOE reported that the nearly $11 billion aggregate funding for the State Energy Program (SEP), Energy Efficiency and Conservation Block Grants (EECBG) and Weatherization Assistance Program (WAP) are essentially fully committed, and Matt Rogers, the US DOE stimulus funding "czar" recently issued a statement that 90% of the funding is obligated. US DOE has paid out about $1.8 billion, or about 17% of the total.

The Senate, the RES, and the EERS

  • The failure of the Senate to enact climate and energy legislation has riled industry and interest groups whose lobbying strategies for the last eighteen months were predicated on eventual enactment of comprehensive legislation. The national environmental groups said they had spent $100 million advocating for carbon caps. A group of utilities said they had spent more than $60 million advocating for carbon caps to provide regulatory certainty to the industry. The RE industry estimated that it also spent about $60 million advocating for a national Renewable Electricity Standard (RES). The RE people hired former Senate Majority Leader Tom Daschle as a lobbyist, produced a letter to Senator Reid from a bipartisan group of 33 Senators, and said they had 62 Senators pledged to support an RES. Senator Reid responded that while they might have 62 votes for a standalone RES, they do not have 62 votes for a larger bill that contains an RES. The RE industry continues to work during the recess to gather support to bring the RES to the Senate floor before Congress adjourns for the year.
  • Our best hope as an industry, which now seems like a long shot, is to get an EERS adopted as part of a national RES during a lame duck session of Congress. There is an RES in both the Waxman-Markey bill and in the ACELA bill, and in both bills the RES contains the provision that EE can be used to satisfy part of the RE requirement, a sort of stepchild version of a national EERS. The problem is that the EE component of both bills is inadequate. In the Waxman-Markey bill, the EE requirement gets close to business as usual (BAU), which is EE at about 6% of total electricity resources by 2020. In the ACELA bill, the EE requirement is substantially below BAU, perhaps 4% of total electricity resources. In comparison, the EERS coalition proposal for a standalone national EERS would get us to about 11% EE by 2020, and the NAESCO NEER/EERS-2 proposal which generated interest among key Senate staff would get us to about 20% EE by 2020.
  • Senators who are sponsoring the EERS are trying to make an accommodation with the EERS coalition by offering to increase the total RES target and/or to increase the allowable percentage of EE. But the discussion is now around provisions that would be only marginally better than Business As Usual. NAESCO's position is that the cap on EE in the RES should be lifted, leaving it up to the states and utilities to determine the most cost-effective way to meet the national mandate. NAESCO's position makes many in the EERS coalition uncomfortable, because it pits EE against RE. But we think it is good national policy (EE is much less expensive than RE) and will be much better for NAESCO members.

NAESCO FEDERAL ADVOCACY ACTIVITIES

At the beginning of the Obama Administration, NAESCO and the other national energy efficiency and environmental advocates agreed on a three-phase strategy.

  • The first phase was the passage of ARRA, which was intended to jump-start the economy and to establish energy efficiency programs as a major element of national energy policy with an unprecedented level of federal funding.
  • The second phase was to be a set of "Jobs Bills" that would bridge the gap between ARRA and long-term climate and energy legislation by directing additional federal funding into residential retrofits (Home Star), commercial building retrofits (Building Star), industrial efficiency programs, rural efficiency programs and the replacement of pre-1976 mobile homes.
  • The third phase was to be climate and energy legislation that would re-set national energy strategy and provide, through carbon taxes or cap-and-trade regimes, hundreds of billions of dollars for investments in energy efficiency and a portfolio of Clean Energy electricity generation (renewables, coal with carbon sequestration, nuclear and advanced natural gas).

Unfortunately the strategy did not work as planned.

  • ARRA was enacted on schedule in early 2009, but it has taken much longer than anticipated to get the energy efficiency program funding on the street and producing jobs (see below for ARRA status report).
  • The House made a monumental effort in the spring of 2009 and passed comprehensive climate and energy legislation, the Waxman-Markey bill, by a very close margin in June. Waxman-Markey established a cap-and-trade system for carbon emissions as well as a carbon emissions allowance trading system that provided significant long-term funding for EE and RE programs starting in 2013. Also in June, the Senate passed the energy half of a comprehensive climate and energy bill out of committee, with bi-partisan support. But the Senate has not been able to complete its work on the climate half of a comprehensive bill, so the prospects for comprehensive legislation being enacted are dim.
  • In late 2009, when the national coalitions began to advocate for the Jobs Bills as the logical bridge between the expiration of the ARRA funding and the beginning of the funding from the carbon allowance trading, we had little in the way of results from the ARRA funding to show that large-scale EE programs could create substantial employment. Congressional leaders were reluctant to push for new funding, especially since the Republican leadership and some moderate Democrats were becoming increasingly worried about the deficit.

American Recovery and Reinvestment Act (ARRA)
The programs are still having problems, and spending lags significantly behind the levels that Congress and the Obama Administration had hoped for (see recent report from the DOE Inspector General on the EECBG program). During the last quarter, the ARRA-funded energy efficiency programs have begun to hit their stride. In its July 30, report, US DOE reported that the nearly $11 billion aggregate funding for the State Energy Program (SEP), Energy Efficiency and Conservation Block Grants (EECBG) and Weatherization Assistance Program (WAP) are essentially fully committed. US DOE has paid out about $1.8 billion, or about 17% of the total.

NAESCO ARRA Advocacy Activities
NAESCO has been working with the National Association of State Energy Officials (NAESO) and with the Energy Services Coalition (ESC) to identify and address program bottlenecks. NAESCO regularly responds to requests from US DOE officials for information and "best practices" and has participated in working groups convened by US DOE, such as the Finance SWAT Team, which assembled a set of resources and held a series of webinars on finance issues earlier this year. The resources and downloadable versions of the past webinars are available on the US DOE website.

NAESCO is now working with the ESC and NASEO to develop a streamlined program design that we believe will help states that have fallen behind in their program implementation and are in danger of losing some of their ARRA grants to quickly develop and implement public buildings ESPC programs. We will present this program design at the upcoming NASEO conference in Boston at the end of September (click here for conference information).

The Jobs Bills
Home Star has attracted bi-partisan sponsorship in both the House and Senate. In early 2010, the Obama Administration latched onto Home Star, because of its populist appeal, as the poster child for increased investment in energy efficiency, but the rest of the Jobs Bill portfolio languished. In the spring of 2010, Home Star passed the House as part of a major package of employment legislation, a second stimulus bill. The Senate has not considered this House bill as a whole, but has considered some of its individual measures, such as Home Star, which is part of the so-called "Spill Bill" that Majority Leader Reid is trying to assemble because it meets his qualification of bi-partisan sponsorship.

NAESCO Jobs Bills Advocacy
NAESCO has participated in both the Home Star and Building Star coalitions. We have attended meetings, participated in conference calls and webinars, and signed letters of support to Members of Congress. However, we have not made Home Star and Building Star our top priorities. NAESCO members do not sell retrofits to individual 1-4 family residential buildings, and so would not directly benefit from Home Star. As discussed above, Building Star has languished for lack of support from the Obama Administration and Congressional leadership. So we have felt that NAESCO efforts are better focused on obtaining passage of an EERS (see discussion below).

Climate and Energy Legislation
As noted above, the House passed comprehensive climate and energy legislation, the Waxman-Markey bill, in June of 2009. The Senate has been working on comprehensive legislation for about 18 months. The Senate Energy and Natural Resources Committee, with bi-partisan support, passed ACELA, the energy portion of a comprehensive bill, in June of 2009, but has not been able to pass that bill through the entire Senate, or to develop a comprehensive energy and climate bill that can muster the 60 votes required to overcome a Republican filibuster (see NAESCO website for a brief history of the Senate legislative efforts).

Senator Reid announced in mid-July that he was suspending the effort to assemble a comprehensive bill, and would instead bring a smaller bill to the floor (now known as the "Spill Bill") that reforms the management of offshore drilling, increases the corporate liability for oil spills, funds Home Star, provides incentives for heavy vehicles to switch to natural gas and provides funding for the Land and Water Conservation Fund. He then announced at the end of July that he could not find 60 votes for that limited package and so put it off until September. The sticking point is the increased liability of offshore drillers, which is being negotiated during the current Congressional recess.

NAESCO EERS Advocacy Efforts
Throughout the effort to pass comprehensive energy and climate legislation, NAESCO has focused on the measure that we think has the most long-term potential for our industry – adoption of a national Energy Efficiency Resource Standard (EERS). An EERS would require that all utilities procure a minimum percentage of their energy resources from efficiency, and would create a long-term market totaling hundreds of billions of dollars for energy efficiency services.

NAESCO participated in the national EERS coalition in 2007 and became one of the core members of the national coalition that promoted an EERS during 2009. At the beginning of 2010, the NAESCO Board approved our request that we use an extraordinary portion of the advocacy budget to promote adoption of an EERS. We retained Lynn Sutcliffe to help with the advocacy effort and we put together a breakthrough proposal that we call the NEER (National Energy Efficiency Resource) standard. NEER would require that all utilities that need new capacity procure 60% of that capacity from energy efficiency, and that the utilities finance the energy efficiency improvements for their customers. NEER would produce hundreds of thousand of jobs, hundreds of billions of dollars of net economic benefits and more than the entire 2020 utility goal for carbon reduction.

Lynn got a good initial reception to NEER from Senate staffers, and we were making some headway with the EERS coalition, when the leaders of the coalition, in the early summer, asked us to set aside NEER as an alternate approach because it was confusing the staffers. We agreed to put aside NEER and to instead support a doubled EERS (2% instead of 1%). Then Senator Reid pulled the plug.

  • Our current position is to wait and see what happens in the Senate after the summer recess.
  • One possibility is that the Senate will not take up an energy bill, because there will still not be 60 votes, and any action will be put off until a lame duck session in late November.
  • Another possibility is that a compromise on oil spill liability will be reached and there will be enough votes for Senate action on the Spill Bill in September. But that bill would not have any EE provisions except Home Star.

A third possibility is that the RE people gather enough momentum to bring an RES to the Senate floor, either as part of a Spill Bill or as a separate bill. Then substantial EE provisions would potentially be back in play as part of an RES.

In the meantime we have dialed back our advocacy efforts, recognizing that in an arena where other groups are spending tens of millions, we need to conserve our modest resources for the final push, if there is one. Our best hope seems to be to get an EERS as part of a national RES.

There is an RES in both the Waxman-Markey bill and in the ACELA bill, and in both bills the RES contains the provision that EE can be used to satisfy part of the RE requirement, a sort of stepchild version of a national EERS. The problem is that the EE component of both bills is inadequate. In the Waxman-Markey bill, the EE requirement gets close to business as usual (BAU), which is EE at about 6% of total electricity resources by 2020. In the ACELA bill, the EE requirement is substantially below BAU, perhaps 4% of total electricity resources. In comparison, the coalition proposal for a standalone national EERS would get us to about 11% EE by 2020, and the NAESCO NEER/EERS-2 proposal would get us to about 20% EE by 2020.

Senators who are sponsoring the EERS are trying to make an accommodation with the EERS coalition by offering to increase the total RES target and/or to increase the allowable percentage of EE. But the discussion is now around provisions that would be only marginally better than BAU. NAESCO's position is that we should simply remove the cap on EE in the RES, leaving it up to the states and utilities to determine the most cost-effective way to meet the national mandate. NAESCO's position makes many in the EERS coalition uncomfortable, because it pits EE against RE. But we think it is good national policy (EE is much less expensive than RE) and will be much better for NAESCO members.

Property Assessed Clean Energy (PACE) Programs
During the last month, the momentum that had been building for the implementation of PACE programs around the country has been quashed by the actions of the federal home financing agencies – Fannie Mae, Freddie Mac and the FHFA. The federal agencies are concerned that the PACE programs, which provides financing for building owners (residential and commercial) to retrofit their homes and businesses with EE and RE measures that is repaid through additional tax assessments, will threaten the value of the home mortgages that they back. In early July FHFA issued a Statement directing Fannie Mae and Freddie Mac to review their credit standards in light of the fact that PACE assessments are to be considered additional loans against the value of the property, loans that are senior to mortgages. The Statement effectively shut down the PACE programs across the country.

The response to the FHFA Statement has been a series of lawsuits from states and local governments that have PACE programs, the introduction of national legislation that would effectively reverse the FHFA Statement, and negotiations by interested Congressmen (e.g., Representative Steve Israel) and the Administration with FHFA to allow for pilot PACE programs to test whether the problems that FHFA fears are real. Significantly, however, neither Administration officials nor Congressional leaders have gone public in opposition to FHFA, apparently because they do not want to appear to be meddling with housing finance in the midst of the current shaky economic recovery.

NAESCO PACE Advocacy Activities
NAESCO is a member of the coalitions that are working to establish PACE programs across the country. Commercial building PACE programs, which would be of major interest to nearly all NAESCO members, have major issues of their own, primarily the shaky finances of the commercial real estate industry, that do not, at the moment, seem susceptible to policy solutions. A paper summarizing the current status of the PACE programs can be found on the NAESCO website at http://www.naesco.org/policy/federal/default.htm.

HUD
Among our members that serve the Public Housing market, there is considerable concern regarding the current revisions of a number of the key documents affecting the process by which PHAs procure energy services from ESCOs through EPCs, which has been the primary source of all energy efficiency historically achieved at PHAs. The significant delays in EPC review and execution, the slow roll out of the revised documentation, and the resultant hesitancy by PHAs to issue RFQs for new energy efficiency projects have resulted in considerable uncertainty by ESCOs and their PHA customers leading to a slowdown in project approvals.

NAESCO HUD Advocacy Activities
NAESCO sampled several member companies working in the HUD market and initially identified 21 contracts (some dating back to 2009) still "under review" -- totaling $134 million in delayed investment. In addition, there is easily $35 million in RFQs that have not been issued due to concern by PHAs about the prospective changes in the procurement process. According to the HUD Strategic Plan for FY2010-2015, the stated goal is to retrofit and make green 159,000 units. The contracts currently "under review" represent 29,711 units to be retrofitted or 19% of the HUD strategic goal that could be met now in year one of the five year strategic plan.

After consulting with our members active in this market, NAESCO wrote to HUD Assistant Secretary for Public and Indian Housing Sandra Henriquez and her team at the agency to request a meeting to discuss, among other things, the timeframe for review and issuance of the final notices including the long-awaited revisions to the Green Book, the apparent change in requirements for projects that are underway and have been fully negotiated, and the apparent change in measurement and verification requirements. The request for a meeting was granted and on August 4, 2010, NAESCO and the representatives of seven NAESCO member companies met with approximately fifteen HUD managers and staff directly involved in the formulation of policies related to PHA acquisition of energy efficiency resources through EPCs. The two-hour meeting resulted in follow up requests for information by HUD and subsequent communication with members of the HUD team.

NAESCO has sent a follow up letter to the HUD principals and is currently working with HUD to establish a more transparent review process and to create a better communications process among the Energy Center Office, the field offices, and the HUD headquarters managers, and the ESCO service providers.

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REGIONAL ADVOCACY ACTIVITIES

NAESCO continues to work in several regional activities -- one in the Southeast and three in the Northeast -- that may provide significant opportunities to NAESCO members, as described below.

Tennessee Valley Authority (TVA)
TVA is in the process of preparing its five-year Integrated Resource Plan (IRP), which has the potential of significantly increasing TVA investment in energy efficiency through its service region. The ideal conclusion of the IRP is that TVA will conclude, as has the Bonneville Power Authority, a similar federal Power Marketing Agency, that energy efficiency is the first resource. NAESCO is becoming involved in the IRP process, and will work with regional energy efficiency, renewable energy and environmental groups to try to maximize TVA's investment in energy efficiency.

Regional Greenhouse Gas Initiative (RGGI)
RGGI is a prototype of a national carbon cap-and-trade program that encompasses nine Northeastern states that auction carbon emissions allowances and invest the auction proceeds in energy efficiency programs. These RGGI-financed programs are complementary to the substantial utility and state-administered EE programs in each of the RGGI states. NAESCO is participating in the development of RGGI through its service on the Advisory Committee for the New York program (approximately 34% of the total RGGI program) that advises NYSERDA, the program administrator, on the composition of the RGGI program portfolio. So we are getting useful early experience with the issues that will affect the investment of the proceeds of a national cap-and-trade program. The major current issues for RGGI are the drop in revenues from the quarterly sale of allowances (due to the recession's lowering regional electricity consumption) and the attempts by several states to use RGGI funds for general fund, rather than energy efficiency, expenditures.

Northeast Regional EM&V Forum
NAESCO is participating in this organization that is attempting to understand and harmonize the EM&V protocols that are used by utility and state energy efficiency programs in ten Northeastern states. The Forum involves a number of very detailed studies of the components of program EM&V, which NAESCO will summarize for its members as they become publically available.

ISO-NE and PJM Future Capacity Markets
NAESCO continues to monitor the development of these regional markets in which energy efficiency and demand response companies can bid on an equal footing with new generation to supply future electricity resources. To date, demand side resources have won about 90% of the ISO-NE bids. Because of the recession, the need for new capacity is dropping, but when demand growth picks up again, this may be a significant new source of revenue for ESPC projects.

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STATE ADVOCACY ACTIVITIES

As Washington has struggled to come to grips with comprehensive climate and energy legislation, the states have been moving ahead aggressively. Twenty-seven states, with an aggregate 68% of US electricity usage, now have EERS mandates in place. Thirty-nine states have RES mandates. Many of these mandates are not up to the national standard that NAESCO advocates (2%/year EERS or 60% of new capacity), but the states are clearly setting the pace and accumulating the experience required to move into the new clean energy economy. The following table contains a summary of current NAESCO state advocacy activities.

Current NAESCO Target States

Massachusetts Working with DCAM and DOER to accelerate ESPC programs
Connecticut Review annual utility EE plans
New York Participate in Evaluation Advisory Group and RGGI Advisory Group
New Jersey Participate in development of state Energy Master Plan (EMP)
Maryland Comment on utility EE program plans
North Carolina Participate in development of EE and RE advocates program for 2011
Georgia Participate in ESPC Constitutional Amendment ballot campaign
Florida Participate in utility EE program cases
Texas Monitor progress in ending the de facto moratorium of state building ESPC
Ohio Monitor EERS program results
Illinois Monitor EERS program results
Indiana Monitor EERS program results
Michigan Continue work on state ESPC program + monitor utility EE programs
California Participate in utility EM&V, utility incentives and LT planning proceedings
Washington Monitor de-coupling proceeding
Arizona Monitor utility EE programs
Nevada Monitor utility EE programs
Colorado Monitor effects of constitutional amendments (if passed)

 
NAESCO is active in all of the key state proceedings that will have an immediate effect on the ESCO industry and/or that have the potential of becoming national precedents. Highlights of our work during the past few months are as follows.

California
The utilities and other stakeholders continue to wrestle with the final evaluation of the 2006-2008 programs, which will determine the incentive compensation paid to the utilities for program management. Because of the difficulty of agreeing on this evaluation, the CPUC has opened a new proceeding to develop a new EM&V system for the next program cycle, which begins in 2013. NAESCO is a party to this proceeding, and will participate in the development of the new system. The CPUC has also issued an initial report, subject to two rounds of comments, that specifies the characteristics of a Smart Grid. Of particular interest is the Commission's principle that a Smart Grid should be able to substantiate customer GHG reductions, which means that a Smart Grid should be able to monitor and track customer energy use reductions and convert those into GHG reductions.

On another note, the state Inspector General for ARRA funds recently issued a report criticizing the Department of General Services (DGS) for spending only $121,000 of its $25 million grant for energy efficiency improvements in state facilities. It appears that DGS is not only resistant to implementing ESPC projects but also fully funded projects that use federal dollars. NAESCO is writing a letter to the Inspector General pointing out that the state is missing a huge to leverage the $25 million ARRA grant into $100 million or more of ESPC projects in state facilities.

Finally, in a development that bears watching because of its potential national implications, there is an interesting case in California in which the CPUC has asked FERC for a declarative ruling about the validity of a new Feed-in Tariff (FIT) that the CPUC wants to apply to CHP projects 20 MW and smaller. FERC is generally receptive to state FITs that are based on avoided costs, and this case may test the basis for establishing avoided costs.

Texas
The PUCT approved modest changes to the Energy Efficiency Rule (Substantive Rule § 25.181) on July 30. The changes include raising the energy efficiency goal to 25% of load growth, capping the per customer expenditures for energy efficiency programs, increasing the avoided costs used in cost/benefit calculations, eliminating the target bonus for serving hard-to-reach customers, and requiring utilities to facilitate the participation of Retail Electricity Providers in energy efficiency programs. NAESCO and a number of other parties argued for more aggressive EE goals and higher customer cost caps, but the Commission was apparently swayed by the utilities' arguments that significantly expanded programs would be a hardship for customers.

NAESCO is also monitoring the efforts to end the de facto moratorium of ESCP projects in Texas state facilities. NAESCO was scheduled to testify before a legislative committee in early August, but the appearance was postponed because the state seems to be moving toward ending the moratorium without the need for new legislation. NAESCO is on standby to testify at a future legislative hearing if required.

Massachusetts
NAESCO has coordinated a group of ESCOs to provide suggestions to the state Division of Capital Asset Management (DCAM) and the Division of Energy Resources to streamline the ESPC project development process and to revise the standard ESPC contract to maximize ESCO participation in Green Communities and ARRA program implementation. NAESCO sent a letter to state officials in early August with our suggestions and followed up with a meeting with those officials in early September.

New York
NAESCO is participating in the Evaluation Advisory Group, the successor to the SBC Advisory Group, which is setting program EM&V standards and protocols for the approximately $1 billion of funding in the 2009-2001 program cycle. Recent developments include the utilities' filing their second quarter 2010 progress reports, and petitioning the PSC to release them from the incentive/penalty system that the PSC had ordered, on the grounds that the PSC program approval process was too slow to allow the utilities to have a reasonable chance of making their targets. Later in the year, the PSC will consider the renewal of the Energy $mart program, the main NYSERDA program that has now been operating for a decade.

Georgia
NAESCO is participating in the Steering Committee of ESCOS and other interested parties that are members of Georgia Taxpayers for Energy Efficiency, the organization that is running the ballot campaign to ratify a Constitutional Amendment designed to facilitate ESPC in the state. NAESCO has facilitated raising campaign funding from most of the NAESCO member ESCOs that do business in Georgia. The campaign faces an uphill battle, as polling in late August indicates that the potential voters are split, with roughly a third favoring the ballot questions, a third opposed and a third undecided. The campaign expects to do additional polling in early October.

Michigan
NAESCO continues to work with the Energy Services Coalition and with the Michigan Department of Energy, Labor and Economic Growth (DELEG) to try to get a state building ESPC program on track. The ESC is holding a state chapter organizational meeting in Lansing this week, and we hope to use the formation of this chapter, along with the looming deadlines for the expenditure of ARRA funds, to shake loose at least a few projects before the end of the year.

North Carolina
The North Carolina Sustainable Energy Association (NCSEA) reported in its recent legislative wrap-up that the utilities have meet their Renewable Energy Portfolio Standard (REPS) goals through 2014 and are significantly under their price caps. A substantial percentage of the REPS goals has been met with energy efficiency. This of course means that the goals are too low, and that a combination of more aggressive EE and RE programs can supply the electricity growth requirements of the state at less cost than the proposed new nuclear plants. NCSEA intends to bring legislative proposals to the 2011 legislature, the so-called Long Session, which will separate the EERS from the REPS. NAESCO will work with the NCSEA and with the North Carolina chapter of the ESC, to prepare and support this legislation.

Florida
NAESCO, at the request of the Southern Alliance for Clean Energy, wrote an Op-Ed piece that was published in the Tallahassee Democrat urging the Florida Public Service Commission to optimize the benefits of EE to ratepayers by ensuring that the utility EE program budgets are not inflated.

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New Members

NAESCO welcomes the following new members.

CCI Group LLC - CCI Group, LLC is part of the CCI Alliance of Companies along with CCI Solutions, LLC, a newly formed 8(a) company. The CCI Companies are both subsidiaries of The Bristol Bay Native Corporation, one of the original Alaskan Native Corporations. The CCI Companies are leading "Turn-Key" providers of energy services, and currently serve federal and institutional customers throughout the United States, specializing in providing energy efficiency solutions that significantly reduce energy consumption and harmful emissions. The CCI Companies deliver the energy engineering expertise required to develop comprehensive energy savings projects and renewable energy measures.

Energi Insurance Services, Inc. - Energi Insurance Services, Inc. provides comprehensive insurance programs to the energy industry in all 50 states and has developed insurance provider programs, from coverage forms to effective loss prevention programs. In addition, the Company has developed a proprietary safety and loss prevention program, SafetyPLUS™ that is customized for clients. The company's shareholders include leading energy distribution companies, a preeminent worldwide reinsurance company and Energi management.

Functional Devices, Inc. - Functional Devices, Inc. has been designing and manufacturing quality electronic devices in the United States of America since 1969. Current product offerings include relays, current sensors, power control, enclosures, power supplies, transformers, and accessories. Functional Devices has established itself as a leader in the HVAC, Building Controls, Energy Management, Energy Savings, Lighting Controls, and Wireless industries.

One Step Solution - One Step Solution offers world-class environmentally responsible LED & Fluorescent lamp solutions for general lighting application. Our Lighting products utilize robust LED technology which enables us to offer a significant amount in Energy Savings (Conservation & Efficiency), Longer Life (Longevity), Reliable (Sustainability), Friendly to the Environment (Green), and Safe (No Mercury, Lead, and UV).These series has distinguished itself as superior in performance, using the latest technology that can produce high luminance of warm and cool white light with up to 90% of energy savings.

Potomac Region Solar Energy Association - The Potomac Region Solar Energy Association (PRSEA) is a non-profit organization whose purposes are to further the development, use of, and support for solar energy and related arts, sciences, and technologies with concern for the economic, environmental, and social fabric of the Washington DC region.

Standard Refrigeration - Standard Refrigeration Co., Inc. is a Mechanical and Electrical Contractor in business since 1947. The firm specializes in the development of refrigeration technology and the installation of highly controlled environments. Standard Refrigeration is a wholly owned and managed firm headquartered in Puerto Rico.

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Upcoming Events
 

Southeast Regional Meeting
September 23, 2010
Westin Charlotte
601 South College Street, Charlotte, NC

Be Part of the Emerging Green Marketplace - Register for the NAESCO Southeast Regional Workshop Today!

Additional Information

2010 NAESCO's 27th Annual Conference
November 9-10, 2010
Arizona Biltmore Hotel, Phoenix, AZ

NAESCO's 2010 Annual Conference program focuses on the many exciting market opportunities for providers of energy efficiency and alternative energy resources while fully acknowledging the challenges of doing business in an ailing and volatile economy. Conference sessions will focus on key market and political developments affecting the ways in which your company sets and meets its strategic goals. Among the topics to be addressed:

  • Expanding the value chain for energy efficiency resources in the current political climate
  • Assessing the impact of global economic volatility on energy production and resource acquisition
  • Examining whether contraction in the capital markets is affecting project financing availability
  • Evaluating the effect of burgeoning utility energy efficiency programs on the acceleration of the existing customer base for efficiency products and services
  • Prognosticating on the sustainability of state and municipal energy efficiency programs funded by federal stimulus monies on long-term energy efficiency investment

There is a great deal of early interest in this, NAESCO's 27th Annual Conference, and we do urge members to register for both a hotel room as well as the conference itself as soon as possible.

Additional Information

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Industry News

New Reports Finds States Leading the Way Toward A Clean Energy Future
According to a new report released by the National Governor's Association (NGA), states are surpassing the federal government in the areas of energy efficiency and clean electricity. The report states that since 2008, forty-nine states adopted or updated policies relating to clean electricity; forty-seven states took action to expand their energy efficiency measures; and thirty-nine states developed policies and made investments to advance green economic development, largely as part of state economic recovery strategies. Efforts to advance the green economic sector within each state also emerged as a new theme across the country.

The report examines clean energy activities by all 50 states, as well as the territories and commonwealths. The activities span seven categories including: energy efficiency; clean electricity; alternative fuels and vehicles; Lead by Example initiatives (greening state government facilities and operations); greenhouse gas emissions; clean energy research, development and demonstration (RD&D); and a new category, green economic development, which covers initiatives in the clean energy sector. Clean energy sources covered in the report include all those defined as such by a state.

A state-by-state listing of clean energy actions, as well as state clean energy actions listed by category, can be found on the NGA Center by clicking here.

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New Survey Indicates Healthcare Sector More Likely to Invest in Energy Efficiency
According to new research from the American Society for Healthcare Engineering (ASHE) and Johnson Controls, healthcare organizations are more likely to invest in energy efficiency for their facilities compared to other industry sectors across North America.

In March 2010, Johnson Controls, in conjunction with ASHE and the International Facility Management Association (IFMA), commissioned the 2010 Energy Efficiency Indicator (EEI) survey, which polled 2,882 executives and managers responsible for making investments and managing energy in facilities worldwide. Of these respondents, 288 operated in the healthcare sector in North America. The research found that 58 percent of healthcare building decision-makers say that energy management was very or extremely important to their organization, compared with 52 percent among North American respondents across all sectors. Sixty-two percent of healthcare organizations plan to make capital investments in energy efficiency over the next 12 months, compared with only 52 percent overall in North America. The survey indicates that the healthcare sector has implemented a variety of measures to achieve energy efficiency including lighting retrofits (73%), adjustments to HVAC controls (57%), installation of occupancy or daylight sensors (56%) and upgrades or improvements to building automation systems (56%). Other notable measures include the early replacement of inefficient equipment (41%) and the retro-commissioning of major building systems (23%, up from 16% in 2008).

Compared to results from the 2008 Healthcare EEI, the 2010 findings suggest an upward trend in the percentage of healthcare executives that have a goal of either achieving green building certification or incorporating green elements into their new construction projects (80% in 2010, up from 72% in 2008).

For more information, click here.

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New Report Find Green Buildings Boost Productivity
Workers who moved from conventional office buildings to environmentally friendly "green" buildings said they called in sick less often and were more productive, according to a study by a team of Michigan State University researchers. The researchers, who looked at two case studies in the Lansing area, found that moving to LEED-certified buildings contributed to noticeable reductions in self-reported absenteeism and stress. It also improved the workers' productivity as a result of perceived improvements in health and well-being.

Michigan State University researchers surveyed two groups of employees, 263 in total, working in conventional office buildings and in LEED-certified buildings in the same area of East Lansing, Mich. In the first case study, 56 people moved into a LEED Platinum-rated building, and in the second, 207 people moved into a LEED Silver-rated building.

The researchers found that the move to green buildings:

  • Lowered the average time at work that employees suffered from depression and stress from 20.21 to 14.06 hours a month.
  • Decreased the average work hours per month that asthma and respiratory allergies affected workers from 16.28 to 6.32 hours.
  • Cut the average number of hours per month an employee reported being absent per month because of asthma and allergies from 1.12 to 0.49.
  • Reduces self-reported absenteeism from stress and depression from 0.93 hours per month to 0.47.

Additionally, employees thought that the environment of a conventional building actually depressed their productivity by 0.80 percent. In contrast, they felt a LEED-certified building raised their productivity by 2.18 percent. But perceived productivity showed the biggest boost. According to the researchers, employees could each work about 39 more hours a year in the new building thanks to better light, air quality and ventilation.

The study appears in the online version of the American Journal of Public Health which can be accessed by clicking here.

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New Report Contends National Retrofit Program Will Provide Solution to Job Crisis
According to a report issued by the Center for American Progress and Energy Resource Management Corp, state policies that encourage energy efficiency will result in major job growth within the US construction industry, an industry whose unemployment is among the highest in the country. The US could add 625,000 full-time sustained jobs over the next decade if it retrofits 40 percent of the nation's homes and commercial buildings, according to the report. Such an effort would bring $500 billion in new investments to upgrade 50 million homes and office buildings and generate as much as $64 billion a year in cost savings for U.S. electric ratepayers.

The report identifies ten strategies employed by top states. They are:

  • Energy efficiency measures in Renewable Portfolio Standards; policies that not only require utility companies to meet a set portion of demand from renewable energy but also include energy efficiency as a qualifying form of clean energy.
  • Energy efficiency measures in Renewable Energy Credits; policies that establish markets for tradable clean energy credits and include energy efficiency as a qualifying clean energy resource.
  • Energy efficiency specific standards that require utilities to plan for meeting a percentage of future growth in demand through energy efficiency instead of increasing supply. These policy tools include Energy Efficiency Resource Standards and Energy Efficiency Portfolio Standards.
  • Unbundled utility structures in which energy transmission and distribution utilities are separate from power generation companies that own power plants, encouraging least costs strategies for meeting energy demand through conservation.
  • Decoupled utility rate structures, where utilities' rates are adjusted to compensate for changes in the volume of energy sold, removing the structural disincentive to conserve energy.
  • Aligning efficiency with utility companies' shareholder benefits, such as bonus rates of return, reimbursing program costs, or other incentives that help transform efficiency from a special program into a core business practice.
  • Penalties for noncompliance with energy efficiency standards, to ensure that well-intentioned programs are effectively implemented, monitored, and improved upon over time. Effective policies must have real consequences.
  • Regulatory cost-benefit tests that focus on utilities' real costs, in order to isolate the specific value offered by energy efficiency investments.
  • Property-assessed financing structures that link the benefits of installed efficiency to a building, rather than the owner of the building, allowing repayment of financed investments to transfer automatically to new owners.
  • Service assessment delivery structures, which allow government jurisdictions to directly facilitate financing of upfront capital costs, assuring repayment through municipal or other service assessment mechanisms.

The report, entitled "Efficiency Works: Creating Good Jobs and New Markets through Energy Efficiency" can be downloaded by clicking here.

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TACEEE Study Finds "Smart Meters" Fall Short Of Significantly Reducing Energy Use
According to a new report released by the American Council for an Energy Efficiency Economy (ACEEE), consumers could cut their household electricity use as much as 12 percent and save $35 billion or more over the next 20 years if U.S. utilities go beyond simple "smart meter" initiatives to include a wide range of energy-use feedback tools that get consumers more involved in the process of using less energy, ACEEE based its findings on a review of 57 different residential sector feedback programs between 1974 and 2010. The new report concludes that advanced metering initiatives alone are not sufficient for providing households with the feedback that they need to achieve energy saving; however, they do offer important opportunities. To realize potential feedback-induced savings, advanced meters must be used in conjunction with in-home or web-based displays and well-designed programs that inform and engage people.

ACEEE found that three of the most promising approaches in the short- to medium-term include enhanced billing, daily/weekly feedback, and "off line" and Web-based real-time feedback. However, programs that go beyond "smart meters" are rare. According to ACEEE, no U.S. utilities are currently providing the full range of needed services.

Other findings in the report include:

  • Energy-use feedback can help households gain control over their energy use practices, reduce the amount of wasted energy, and reduce electricity consumption by 4 to 12 percent.
  • Depending on how feedback programs are implemented by all of the nation's electric utilities, consumers might enjoy a cumulative net savings of $2 to $35 billion or more over the next 20 years.
  • Utilities and policymakers should act now to ensure that U.S. households receive needed feedback by providing all households with: enhanced billing in the short term and real-time feedback in the medium term.
  • Providing households with persistent feedback has resulted in sustained savings over time.
  • Since 1995, feedback-induced savings have been higher in Europe than in the United States suggesting important differences in European policies and culture.

To view the full report, click here.

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New Consumer Report Offers Five Tips to Make the U.S. More Efficient
A new report by Consumer Reports offers five tips on how to transform the U.S. into a global energy efficiency leader. The tips are the result of a nationwide survey the magazine conducted after recent data showed that U.S. per capita consumption of energy has hit the lowest level in 41 years in 2009, yet Americans still use more energy than people in most other countries.

Below are summaries of the Consumer Reports' fives tips to make the U.S. more energy efficient.

  1. Strengthen Energy Star qualifications.
  2. Ensure Energy Star product testing is continually updated and strengthened to keep pace with product changes.
  3. Make energy efficiency incentives more clear to the public. The survey found 91 percent homeowners made a purchase or improvement that qualified for a government rebate or tax credit, but only a quarter said took advantage of an incentive program. Reasons included belief that their purchase didn't qualify, confusion over rules and a perception that the amount of the incentive wasn't worth the trouble.
  4. Model successful programs such as the European Union's standards for standby power consumption and Australia's field testing of appliances.
  5. Put pressure on the industry though stiffer fines against manufacturers that don't abide by rules for energy efficiency and media scrutiny of violators.

For more information on the magazine's survey visit www.consumerreports.org.

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Report Finds Growing Trend of "Green Building" In Higher Education
According to the annual digest of the Association for the Advancement of Sustainability in Higher Education's (ASSHE), green building in higher education has been on this rise in U.S. and Canada. In 2007, 60 green campus buildings were planned or certified. In 2008, that number more than doubled with the planning, opening or green certification of 130 green campus buildings. In 2009, another 165 energy efficient campus structures were covered as opening or receiving green certification. Additionally, there are nearly 700 signatories to the American College & University Presidents' Climate Commitment (ACUPCC), an institutional commitment to neutralize greenhouse gas emissions.

The report found that while many institutions use internal green standards, the U.S. Green Building Council's (USGBC) voluntary LEED (Leadership in Energy and Environmental Design) certification program is the most commonly-used green building standard in higher education. LEED measures performance in areas including water efficiency, energy and atmosphere, innovation and design, indoor environmental quality and sustainable sites. The USGBC reports an increase from 42 LEED projects (certified or registered) on higher education campuses in 2001 to 3,866 such projects as of July 15, 2010.

Another emerging trend within campus green building is to look for ways of growing without adding to the campus' square footage. A common theme is the reuse and renovation of existing buildings and materials.

A copy of the digest can be downloaded here.

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Member Projects

Undertaken in Florida, California, Virginia, Texas, Maryland, Pennsylvania, New Hampshire, New York, and the District of Columbia

AECOM Awarded $101-million Design-build Contract For Water And Wastewater Project In Davie, FL
AECOM Technology Corporation announced that it has been awarded a $101-million design-build contract by the Town of Davie, Fla. The company will design and construct a 6-million-gallon-per-day (MGD) brackish water membrane treatment plant as well as a 3.5-MGD membrane water reclamation facility. The project also includes a new utility office for the town, a series of five raw water wells, two deep injection wells and reuse of the reclaimed water. The project is scheduled for completion during 2013.

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Chevron Energy Solutions And San Dieguito Union High School District Announce 2MW Solar Project
Chevron Energy Solutions and San Dieguito Union High School District announced today the start of construction for a 2MW solar project that is expected to save the district more than $10 million in energy savings over the life of the project. The solar project is expected to produce more than 70 percent of the electricity needed at Canyon Crest Academy and La Costa Canyon High School. By reducing its purchase of utility power, it is anticipated that the district will reduce carbon emissions by more than 2,200 metric tons, equivalent to removing more than 400 cars from the road. Chevron Energy Solutions designed the solar system and will build, operate, maintain, measure and guarantee the system's performance for the district. The company is the largest installer of solar power in the U.S. education market and has developed hundreds of projects that improve energy efficiency and provide renewable power for education, government and business facilities. The project is funded by the American Recovery and Reinvestment Act (ARRA) and the solar energy system also qualifies for more than $4 million in incentive payments.

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Chevron Energy Solutions and City of Brea Announce 1.8MW Solar and Energy Efficiency Project
Chevron Energy Solutions and the City of Brea announced today the start of construction of an energy efficiency and solar project expected to save the city more than $13 million in net energy savings over the life of the project. The solar and energy efficiency improvements generate savings to pay for the infrastructure costs and are expected to reduce the city's energy use by more than 40 percent. By reducing its purchase of utility power, it is anticipated that the city will reduce carbon emissions by more than 86,000 metric tons, equivalent to removing more than 16,000 cars from the road over the life of the project. The solar power at the Reservoir City Pump Yard is also expected to help mitigate future pumping costs to the city. Additionally, the project helps stimulate the local economy by providing more than 25 local opportunities for employment and more than 125 indirect jobs with an estimated $3 million impact to the local economy. The project is expected to be completed in 2011. Solar production data and other project data will be available to the community on an informational display at the Community Center and on the city's website.

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Pepco Energy Services Chosen to implement a $31 million Project at Henderson Hall Marine Corps Base
Pepco Energy Services has been chosen by the U.S. Army Military District of Washington to implement a $31 million comprehensive energy and maintenance savings performance contracting project for the Henderson Hall Marine Corps Base in Arlington, Virginia. The 15-year performance contract calls for Pepco Energy Services to invest over $7 million in capital improvements that will be paid back from the energy and maintenance savings generated by the investment in infrastructure and efficiency improvements. Under the terms of the contract, Pepco Energy Services will decentralize the steam system by installing local steam and hot water boilers in 20 buildings and will decommission the existing, inefficient central steam plant. Pepco Energy Services will also upgrade the lighting with energy efficient lamps and ballasts, retrofit water-saving plumbing fixtures, replace existing inefficient heating and air-conditioning systems and install an energy management control system in each building linked to the existing control network. These infrastructure and efficiency improvements are estimated to reduce water use by 24 percent, electricity use by 28 percent and natural gas use by 80 percent.

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Pepco Energy Services Signs $35 Million Energy Efficiency Contract with Prince George's County Schools
Pepco Energy Services has signed a fourth comprehensive energy savings performance contract with Prince George's County Maryland Public Schools The $35 million contract provides 103 county school system facilities with new energy infrastructure, including heating, cooling and ventilation system modernization, lighting improvements, water conservation, energy controls and renewable energy systems. Pepco Energy Services will begin construction immediately. The project is expected to save Prince George's County Public Schools roughly $3 million annually. This contract will also further reduce greenhouse gas emissions by 30 million pounds of carbon dioxide a year, the equivalent of removing 3,200 cars from the road and saving 4,500 acres of trees. When all phases are complete, the project will provide approximately $74 million in energy savings over 13 years.

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Pepco Energy Services Awarded $7.5 Million Performance Contract for One Judiciary Square
Pepco Energy Services has been awarded a competitive bid contract by the District of Columbia's Department of Real Estate Services (DRES) to implement a $7.5 million energy efficiency retrofit project at the One Judiciary Square facility in Washington, D.C. Comprised of 850,000 square feet, One Judiciary Square is one of the major buildings owned and operated by the government of the District of Columbia. Pepco Energy Services will install a building management system, direct digital controls and HVAC upgrades. In addition to saving money and energy, the project will create the equivalent of 16 full-time construction jobs. This project is funded by American Recovery and Reinvestment Act capital and will assist the D.C. government in achieving its energy reduction and conservation goals. Construction began in early August and will be completed within 18 months.

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Schneider Electric Undertakes $1.3 Million Energy Upgrade for Susquehanna Community School District
Susquehanna Community School District in Susquehanna, Pennsylvania, is carrying out facility enhancements worth $1.3 million designed to improve operations, comfort and efficiency throughout the district's elementary and high schools. Schneider Electric will complete the work as a performance contract, guaranteeing that utility costs will be reduced by $37,455 annually once the implementation of the improvements is complete. All HVAC and lighting upgrades will be installed this summer and the buildings will be operational by the start of school this year. Located outside Scranton, the school district serves 985 students at its two schools. Schneider Electric will perform the energy upgrades throughout 178,981 square feet of space. The project is anticipated to show reductions in kilowatt hours by 22 percent, fuel oil by 11 percent, and energy expenditures by 14 percent on an annual basis. Schneider Electric and its Partner NRG Controls North, Inc. will implement multiple energy conservation measures in order to meet these reductions. ECMs to be installed include a new direct digital control energy management system, a full lighting retrofit with motion sensors in the gym, LED exit signs, a cutting-edge electric hot water heater, and new fuel-oil boiler.

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Schneider Electric Selected by General Services Administration for $18.5 Million Building Efficiency Project
Schneider Electric has been awarded an $18.5 million energy savings performance contract (ESPC) with the General Services Administration (GSA) Region 7 to improve energy efficiency, operations and comfort in 16 federal buildings in Texas. To pay for the project, GSA will invest American Recovery and Reinvestment Act funds as well as three years of private-sector financing, in which the money saved from reduced energy consumption will be used to repay the loan. When the installation is complete in August 2011, Schneider Electric guarantees that the GSA Region 7 will save close to $4.7 million over the duration of the five-year contract and 14% in energy savings, as well as reduce carbon emissions by 7,109 greenhouse gas (GHG) tons per year – equivalent to taking 1,663 cars off the roads annually, or planting 2,456 acres of trees to restore the ecosystem balance. Schneider Electric will implement numerous energy conservation measures that include installation of nearly one megawatt of photovoltaic solar panels, boiler replacement, an optimized chilled water system, building automation system upgrades, a data center controls upgrade, an interior lighting fixtures and controls retrofit, and water reduction measures including upgrades to the existing irrigation system controls. Schneider Electric will also integrate the various building automation systems throughout the facilities, a key driver of energy reduction.

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Siemens Helps the City of Rosenberg Address Critical Infrastructure Improvements Through a Guaranteed Performance-Based Solution
Siemens provided turnkey design; engineering and construction services to help the City of Rosenberg, Texas address critical infrastructure improvements through a Guaranteed Performance-based Solution. Conservation measures addressed energy efficiency, water conservation, operational efficiencies and city revenue enhancement via water meter retrofits. Over 8,500 residential and business water meters were replaced and retrofitted utilizing the Neptune ARBTM RS450 Fixed base Advanced Metering Infrastructure that uses radio waves to provide automatic readings.

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Siemens Installs Conservation Measures in Big Spring, Texas
Siemens provided turnkey design, engineering and construction services to help the City of Big Spring, Texas address critical infrastructure improvements through a Guaranteed Performance-based Solution. Conservation measures addressed energy efficiency, water conservation, operational efficiencies and city revenue enhancement via water meter retrofits. Siemens replaced and retrofitted residential and business water meters and installed an advanced water meter system that uses radio waves to provide automatic readings. Additionally, Siemens reworked high side and low side distribution pumps and installed new pumps, controls and variable speed drives.

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Siemens and Metrus Sign Innovative Pay-Per-Performance Energy Efficiency Deal With BAE Systems
Siemens announced that its Building Technologies Division and Metrus Energy, Inc., have undertaken a pay for performance agreement with BAE Systems, to make its facility in Merrimack, New Hampshire, energy efficient. The project, currently underway and scheduled for completion in the fall of 2010, is being underwritten by Metrus through its Efficiency Services Agreement Siemens, which is managing all aspects of the project, will implement the energy efficiency measures and provide the ongoing performance guarantee.

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Trane Provides Infrastructure Upgrades at TIAA-CREF Manhattan Headquarters Expected to Save $765,000 in Annual Energy and Operating Costs
TIAA-CREF, one of the largest institutional real estate investors in the United States partnered with Trane to implement energy efficiency initiatives, including a rooftop thermal storage solution at the company's headquarters in midtown Manhattan that is anticipated to save $765,000 annually in energy and operating costs. The system both conserves energy and reduces off peak power costs. TIAA-CREF leaders also directed the addition of a two-megawatt emergency generator and a new heat rejection solution for the building's critical systems. These systems provide enhanced redundancy for the building's crucial areas, including the trading floors and the data center. To meet the challenge of maximizing the use of high-demand Manhattan real estate, the chilled water/central plant thermal storage system is positioned 28 stories above street level at the organization's 730 Third Avenue headquarters in New York City using an innovative steel structure added to the rooftop.

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Member News

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Ameresco, Inc. Completes Acquisition of Quantum Engineering and Development, Inc.
Ameresco, Inc. has completed the purchase of Quantum Engineering and Development, Inc., an energy service company active in Oregon and Washington. Quantum is currently serving the Portland, Oregon public schools, the State of Washington, and a number of schools, cities and towns throughout Washington State. Quantum will be renamed Ameresco Quantum, Inc., and will lead Ameresco's efforts in the Northwestern United States. Quantum's employees will join Ameresco's current workforce of more than 650.

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ConEdison Solutions Certified As A State-approved Qualified Energy Services Provider In 14 states And Washington, D.C.
The designation allows ConEdison Solutions to provide energy conservation measures for facilities owned or leased by these states and its political subdivisions. The list includes Arizona, Colorado, Connecticut, Delaware, Florida, Kansas, Massachusetts, Missouri, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Virginia, and Wyoming. Services may typically include such measures as project management, site energy audits, energy modeling, lighting retrofits, engineering design, construction management, commissioning, training, and ongoing measurement and verification. To win certification, energy services companies must typically undergo a rigorous examination of their technical competence and business practices. Approved companies must be deemed to possess the technical and managerial competence to develop comprehensive energy efficiency projects that will help a state attain its energy-related goals and objectives. In addition to its certification in the specified states, ConEdison Solutions is also a nationwide provider of energy services to the Department of Defense, the Department of Energy and the United States Postal Service.

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FMI Represents EMC Engineers In Its Sale To Eaton Corp.
FMI Capital Advisors, Inc. a leading investment banking firm to the engineering & construction/infrastructure industry, announced it advised EMC Engineers, Inc. on its sale to Eaton Corporation (NYSE: ETN). Tim Huckaby, Managing Director of the FMI Capital's New Energy group, handled the efforts on the transaction that closed on July 14, 2010. Terms of the deal were not disclosed. Headquartered in Denver, CO, EMC Engineers, Inc. is an energy engineering and energy services company that delivers energy efficiency solutions for a wide range of governmental, educational, commercial and industrial facilities. Eaton Corporation is a diversified power management company with 2009 sales of $11.9 billion. Eaton is a global technology leader in electrical components and systems for power quality, distribution and control. Eaton has approximately 70,000 employees and sells products to customers in more than 150 countries.

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Onset Announces New Online Professional Training Course
Onset announced a new online professional training course on Data Loggers for Performance Monitoring. The four-hour online course targets energy professionals looking to improve building commissioning and diagnostics capabilities, obtain better information during energy audits, and demonstrate the effectiveness of efficiency retrofits. The online course will be held in two, 2-hour sessions on Tuesday, October 12th and Thursday, October 14th, 2010. To learn more or to register, click here.

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Solutia's Performance Films Segment Receives Grant to Invest in Energy-Efficient Technologies
Solutia Inc. (formerly known as CP Films) was recently awarded a $356,000 ARRA grant from the U.S Department of Energy. The awarded funds have been earmarked for the continued research, development and commercialization of high performance, energy- efficient retrofit window film technology for residential commercial buildings. The technology involves new film coatings and techniques designed to improve energy efficiency in every climate zone, specifically films with low emissivity properties, potentially resulting in both winter and summer energy savings.

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